More thoughts on the Padres TV deal

So I seen the response from other bloggers and internet commenters after jbox posted his thing about Garfinkel trying to rebut the Bob Nightengale $70 million a year TV contract, and I thought I should probably comment since lots of people make underlying snide remarks about our bias towards this FO.

First off, are we fans of Tom Garfinkel?

Yes. I've always thought him much more personable than Sandy Alderson in the same role. I started out a fan of Sandy Alderson, then I saw the commercials featuring Sandy and Grady and KT as the "best front office in baseball" and I thought ugh. And then they gave us 2004-2008, which was some of the most uninspired baseball combined with blind luck to back your way into the postseason that I've ever seen and I totally soured on them. Not to mention Sandy Alderson, during a broadcast, saying, "If the fans boo too loud, we'll just turn up the music." When I heard that, I lost my sh_t.

Throughout, I was a fan of Paul DePodesta, even though I'm still not sure what it was he did while he was with the Padres.

I think if anybody were to go back in the archives of Gaslamp Ball, they will see that we've been pretty consistent in realizing a simple fact that I would guess 95% of Padres fans don't realize.

San Diego is a small media market when compared to the other MLB media markets.

I don't know why this information is hard to believe, considering it's true and readily available to be seen. If you Google "Top Media Markets", you will find any number of resources telling you that the Padres are somewhere between 26th and 30th in the US, with a few non-MLB media markets thrown in (cities that incidentally get included in our competition's broadcast area).

The Padres TV Deal, will be strongly based on the size of the Padres media market

If we were San Jose. A smaller media market (but able to draw TV audience from a neighboring HUGE media market), with a stinking rich population filled with stinking rich companies all wanting to advertise with the local baseball team, then I could see bargaining upwards in a TV deal. For example, If/When the A's get a stadium built in San Jose, what do you think it will be named? Yahoo stadium? Google+ Park? eBay Field?

We play, no offense to animal lovers everywhere, at petco park (lowercase intended). Petco... A Fortune one thousand company.

We live in a military town, with some (but not a lot of) high tech companies, minimal discretionary income and a largely transplant populace.

So when I think Bob Nightengale's $70 million is way off, I don't know how this equates to other bloggers and commenters as us having a biased view. Sure. I'm biased in that I'm a fan of Garfinkel (along with lots of other Padres FO members both past and present that I've met), but if this were a FO that I wasn't a fan of, I would call bullshit on the $70 million anyways.

Why?

1. Every other estimate has the Padres between $20-$30 million. So Nightengale's number is an outlier, which immediately makes it suspect.

2. The rumored values of other deals currently in negotiation suggest $150 million a year for an LA team. San Diego is not half the media market of LA. Refer to those references that you Googled earlier. We are a fifth the size of LA. Again, if LA suggests $150 million a year, then a fifth of that is $30 million a year. The top end of everybody's estimate except Bob Nightengale's.

3. Nightengale's reasoning is that his $70 million a year is averaged over an escalated deal and includes equity in the stake that the Padres are getting in FS West San Diego.

OK So the third point is where it gets wishy washy and were I could very well be wrong about Nightengale's numbers (but I don't think I am).

First, I think the Padres are right to get a stake in the regional sports network. I look at the largest teams out there and they basically hedge the money made in TV deals by separately owning their regional sports networks (I'm thinking of YES and NESN). In fact, if San Diego literally had anything else they could broadcast on their RSN, then I would complain that the Padres weren't getting more than Nightengale's estimate that the Padres will be getting a third.

But if Nightengale is including equity in the RSN, then my bad math would suggest that $50 million per year extra is the "equity" of the RSN, which most rumors say the Padres will have a third share in. $50 million a year in equity over 20 years for something the Padres have a third share in suggests that the San Diego RSN, which has yet to actually be created, is currently worth north of $3 billion. Without a deal in place and whose primary draw is the Padres with no opportunity to broadcast an NBA, NHL, or MLS team.

Thank goodness our minor leagues are so good.

But regarding the $3 billion... I just have to say... Does that sound right to anybody? Keep this in mind. Some estimates would say that the YES network is worth $3 billion. And New York's media market? Yeah somewhere around 10 times the size of San Diego's. In Nightengale's own article, he credits the Rangers RSN with a $3 billion valuation and they broadcast to all of Texas. That's the second largest state in the union, mind you, by populous and size.

It seems to me, Nightengale took the most recent estimate he could find of an RSN: $3 billion. Divided that by 3. Divided that by 20. And then added the number to the estimate that everybody else has for the Padres TV deal. Or somebody did that for him.

Feasible? I guess.

So no. I don't believe Bob Nightengale. I think his numbers are exaggerated and I don't think he would've got them from anybody at Fox nor at the Padres, so I still do believe that his numbers were "leaked" to potentially help another team (or every other team) score richer deals. Much like the NFL's constant, hollow threats about moving a football team to LA, claiming that one of the smallest markets in baseball is scoring one of the potentially richest TV contracts is MLB's way of milking as much TV money as possible for each of their teams.

Do we want the Padres to score a ton of money from their cable deal? Yes, if it helps the operating costs and puts a better team on the field. Do we want the deal to be worth Yankee or Ranger money despite the fact that our market would suggest much less?

No, unless you don't mind paying extra on your cable bill so that FSN West can prove some of that YES Network valuation.

[UPDATE] Tom Krasovic writes that Bob Nightengale's numbers are basically a best case scenario. Sooo... Assuming that things work out perfectly over the next 20 years, Bob Nightengale will be proven right.

In that case, I actually think the Padres deal is actually worth a zillion dollars.

The problem with claiming that the Padres are going to be making a certain amount per year based on "best case scenario"? Look at the housing crisis. That's a ton of people that took out the "guaranteed equity" in their "million dollar homes" and then had to get bailed out when nobody was willing to pay six figures for them and the banks came collecting on the money they spent.